Terry Murden: RBS inquiry – little concrete but some pointers

Unfortunately, after a two-and-a-half year probe and 450 pages on what it deems to have gone wrong and how we might make things better next time, the main outcome will be further hand-wringing, pointed fingers and more vitriol.

Vince Cable, the coalition’s bank-basher- in-chief, is looking into whether any former RBS directors should face disqualification. It is a big ask, and to some extent he may be playing to the gallery. It is easy to occupy the moral high ground while the public continues to demand a sacrificial lamb. Already he has been told by advisers at PwC that there was insufficient evidence to proceed with an action.

Lawyers representing shareholders are also keen to extract revenge over the infamous 2008 rights issue after which the shares plunged in value and left them out of pocket.

The problem facing anyone pursuing the RBS directors is proving they acted unlawfully. There is no such proof. Greed, recklessness, misjudgment…the directors may be guilty of all manner of poor decisions, but none of them is in any way criminal.

The FSA was at least good enough to accept its part in the whole sorry mess, providing some satisfaction for Chancellor George Osborne, who decided early in the coalition government to replace it with a new supervisory regime.

But the FSA has also pointed out that it acted within the rules and within the remit laid down by the government of the day. Not only was it sticking to the requirements for a “light touch” regulatory regime as demanded by prime minister Tony Blair and his chancellor, Gordon Brown, it openly boasted about the adoption of such a policy while the UK’s rivals took a tougher stance.

It should also be borne in mind that even today one of the biggest demands on government by businesses in all sectors is to relieve them of so much of the regulatory burdens placed upon them, from employment laws to health and safety.

Banks, however, do demand a somewhat different treatment, given their pivotal role in the financial stability of many thousands of companies and of the country itself. So they should be subject to tighter scrutiny.

The FSA’s investigation has been criticised for its shortcomings, described by some as a whitewash for its apparent inability to bring anyone to book.

But it does recommend ways in which the rules can be tightened up, including adoption of the bonus clawback procedure that Lloyds is pursuing against its former chief executive.

It also provides us with some further insight into the fevered and reckless pursuit of growth at RBS, such as the way in which its chief executive was incentivised to maximise profit.

This may have led to another outcome: the weakness of the bank’s balance sheet which, had the Basel III rules on capital reserves been in place, would have left it unable to pay any dividends after 2005. The bank vaults were being stripped bare to pay for the mad acquisition strategy and to build up that massive debt mountain.

Santa Nicolas promises a euro Christmas present

There have been warnings aplenty about the impact of the eurozone’s stuttering performance, but the economists at Standard Chartered bank are regarded as the best forecasters in the business so cannot be ignored.

If they say the eurozone will contract by 1.5 per cent and that the UK is already shrinking and heading towards recession, we have little choice but to tear up any prediction that offers a counter argument.

The bank’s analysis will no doubt prompt some hastily re-written notes at the Treasury and among a host of other forecasters who thought their own expectations were gloomy enough.

More immediately, the markets remain unconvinced that the EU summit achieved enough to stem concerns over the debt crisis or to guarantee the future of the euro, which fell yesterday as stocks slid and borrowing costs for Italy and Spain rose.

French president Nicolas Sarkozy is promising a deal on the content of the new accord in the next fortnight. Just in time for Christmas. Ho ho ho.